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Datamonitor: AstraZeneca deal lifts Rigel's arthritis drug out of development uncertainty
Having signed a license agreement with AstraZeneca, Rigel has boosted the prospects for R788, its RA drug. However, Phase III trials must address certain safety signals and reassure physicians of its efficacy in key patient populations. Prominent product differentiation will also be vital for the drug to compete with Pfizer's JAK inhibitor, which is set to reach the market two years ahead of it.
After a mixed ending to 2009, Rigel Pharmaceuticals has found its feet in early 2010 in the form of a partnership agreement with AstraZeneca for its R788 (fostamatinib sodium) rheumatoid arthritis (RA) development program. R788, a small molecule spleen tyrosine kinase (Syk) inhibitor, had produced positive data in the TASKi2 trial involving methotrexate-failure patients, but then failed to demonstrate efficacy in the key biologic-failures patient group in its TASKi3 trial.
Despite the shortcomings in the TASKi3 trial, as a result of a higher than expected placebo response rates, Rigel was always keen to pursue further clinical trials based on fairly consistent Phase II response data in the drug-treated groups. In signing the partnership, AstraZeneca clearly sees the potential for R788 as a treatment for RA patients, and particularly in disease-modifying antirheumatic drug (DMARD)-failure patients.
Currently, Datamonitor expects R788 to be positioned in the RA treatment algorithm as an add-on after DMARDs, but before biologics. However, R788's Phase III program will need to generate further convincing data in support of this intent. In doing so, there will be potential for R788 to compete directly with biologics, such as the anti-tumor necrosis factor monoclonal antibodies. This class of drugs includes Enbrel (etanercept), Remicade (infliximab) and Humira (adalimumab). Another area where R788 might see potential is in combination with a biologic, but again this has yet to be established.
Datamonitor views the Rigel/AstraZeneca partnership as a beneficial deal for both parties. Rigel will receive an upfront payment of $100m, with the potential of garnering over $1.2 billion in milestone payments. Moreover, Rigel has secured double-digit royalty payments - although Rigel refused to comment on an exact figure, we can assume it is in the region of 20% or more. Of significance is the fact that the upfront $100m for R788 is larger than recent licensing deals, such as the $85m upfront payment from Bristol-Myers Squibb's for Alder Biopharmaceuticals' injectable interleukin-6 monoclonal antibody ALD518, and Eli Lilly's $90m payment for Incyte's oral Janus kinase (JAK) 1 and 2 inhibitor INCB28050.
Intriguingly, investors took a different view of the Rigel/AstraZeneca partnership, with Rigel stock closing down on the day the partnership was announced. Despite a continued downward trend in Rigel's stock since February 12, there was a 1% upturn at market closure on February 17. Rodman & Renshaw analysts were quoted as saying the share sell-off "comes from pressure on the stock by investors who had a short-term horizon and built position ahead of this event, and never intended to hold on to the shares post-deal". Other potential reasons for the drop in share price after the AstraZeneca partnership announcement could be that investors felt the upfront payment was too small or that the royalty ratio was not as favorable for Rigel as expected.
Rigel had taken R788 as far at it could go on its own for RA, so the deal involving AstraZeneca will enable an extensive Phase III program to begin during the second half of 2010. There is also potential for the drug in both additional immunology indications, like immune thrombocytopenic purpura, as well as non-rheumatology indications, including B-cell and T-cell lymphomas.
Rigel has a history of partnerships with leading pharmaceutical companies, including current partners Merck Serono in cancer and Pfizer in asthma. The latest $100m cash injection will allow Rigel to focus on development of its other prospective compounds.
For AstraZeneca, the global development and commercialization of R788 provides access to what Datamonitor believes will now be a prominent Phase III RA candidate. AstraZeneca discontinued the development of two Phase II drugs, AZD9056 and AZD5672, during 2009, making R788 a good strategic replacement. While AstraZeneca has a proven track record of generating blockbuster brands, it is worth remembering that the company does not have extensive experience in rheumatology indications. Its immunology franchise consists of drugs used to treat respiratory diseases, such as asthma and COPD, and gastroenterology. Vimovo, the fixed dose combination of Nexium (esomeprazole) and naproxen, has been submitted to the FDA and EMEA for the treatment of chronic pain associated with osteoarthritis (with the drug under investigation for RA and ankylosing spondylitis), but the company is expected to market this drug predominantly towards the primary care setting. Should R788 reach the market, Datamonitor believes AstraZeneca will need to structure a clear cut strategic unit to promote the drug to rheumatologists. With the company's track record of large-scale marketing, Datamonitor would expect significant resources to be put behind R788.
In line with Datamonitor's expectations, Rigel announced that AstraZeneca plans to file an NDA in the US and EU during 2013. Provided there are successful Phase III trials and approval, Datamonitor expects launch towards the end of 2014. However, the key question, which requires answering in the Phase III studies, is how R788 can differentiate itself from Pfizer's oral small molecule JAK inhibitor CP-690,550 (tasocitinib), which is currently in Phase III and well ahead of R788 in terms of development.
The R788 program will need to be of similar size and design to the CP-690,550 program, testing across multiple RA patient populations. Additionally, there are certain safety signals that need to be addressed with both drugs. R788 has shown neutropenia and hypertension signals compared to placebo, together with increased incidence of diarrhea. While the observed hypertension may be manageable with anti-hypertensive drugs, this remains a concern in the elderly RA population. Positive safety outcomes from Phase III trials will be essential to quash any ongoing safety concerns. Similarly, CP-690,550 demonstrated neutropenia, but also highlighted other signals including lipid elevation, some LFT abnormalities and gastrointestinal intolerance.
There is undoubtedly an unmet need for oral small molecule drugs with equivalent efficacy to biologics, but uncertainty around rheumatologist uptake for small molecule kinase inhibitors and Pfizer's earlier entry to the market with CP-690,550 represent key barriers to R788's commercial success. Datamonitor expects CP-690,550 to launch in 2012, two years ahead of R788. With both small molecules there are still questions around safety and cost, which may further limit uptake. Datamonitor's forecasts from 2009 put R788's peak sales at around $400m in 2018 in the US and five major EU markets. Depending on early positive Phase III data and a clearer clinical application and differentiation of R788, this forecast could be upgraded.
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